“Impairment” Behind Earnings Quality: The Impact of Asset Impairment AccountingTreatment on Corporate Performance—A Case Study of Qinghai Huading

Abstract

    Impairment accounting helps reflect declines in asset value promptly; however, the actual recognition process requires judgment based on specific asset conditions, which further affects corporate profits. This paper uses Qinghai Huading Industrial Co., Ltd. as a case study, drawing on its annual reports and related announcements from 2023 to 2025. It examines inventory write-downs, accounts receivable bad debt provisions, fixed asset impairments, and intangible asset impairments, and further investigates the impact of asset impairments on corporate profits and earnings quality. The study finds that Qinghai Huading has faced ongoing performance pressures in recent years, with significant fluctuations in impairment losses—amounting to 101.9176 million yuan in 2023, 16.2511 million yuan in 2024, and 48.6116 million yuan in 2025. Additionally, ongoing credit impairments on accounts receivable and other receivables have also affected the company's profits. This paper offers recommendations, including strengthening asset-quality monitoring, improving receivables management, enhancing the objectivity of impairment testing, and reinforcing information disclosure, providing valuable insights for improving accounting information quality and analyzing earnings quality.